Say a sponsor wants to buy a company on a cash free debt free basis, as is normal but the company has bonds in its structure rather than term loans.
What happens there given bonds don't have much prepayment flexibility. Would the sponsor make whole the bonds? Or would sponsors not even consider those companies with bonds in their structure?
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Change of control should trigger redemption
what is coc typically, 101?
precisely, usually CoC happens within 15 days of the event and is 101% of par in addition to accrued interest expense
Just FYI, debt free / cash free refers to the equity value paid not to the capital structure at Closing. You can buy a company “debt free / cash free” and roll the existing debt over (in fact, often you do this for at least some portion of the debt, such as finance leases)
For example, the Target has an EV of 500, of which 200 is net financial debt and 100 is finance leases. Assume you would refinance the net debt, would you only need to raise funds of 400, since the finance leases are assumes/rolled?
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